ELECTROMAT G. R. No.

172699
MANUFACTURING and
RECORDING CORPORATION,
Petitioner,

- versus -
Present:
HON. CIRIACO LAGUNZAD, in his
capacity as Regional Director, National CARPIO, J.,
Capital Region, Department of Labor Chairperson,
and Employment; and HON. HANS LEONARDO-DE CASTRO,*
LEO J. CACDAC, in his capacity as BRION,
Director of Bureau of Labor Relations, PERALTA,** and
Department of Labor and Employment, PEREZ, JJ.
Public Respondents.
Promulgated:
NAGKAKAISANG SAMAHAN NG
MANGGAGAWA NG July 27, 2011
ELECTROMAT-WASTO,
Private Respondent.
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DECISION
BRION, J.:

We resolve the present petition for review on certiorari[1] assailing the

decision[2] and the resolution[3] of the Court of Appeals (CA) dated February 3, 2006
and May 11, 2006, respectively, rendered in CA G.R. SP No. 83847.

The Antecedents

The private respondent Nagkakaisang Samahan ng Manggagawa ng Electromat-

Wasto (union), a charter affiliate of the Workers Advocates for Struggle,
Transformation and Organization (WASTO), applied for registration with the Bureau
of Labor Relations (BLR). Supporting the application were the following documents:
(1) copies of its ratified constitution and by-laws (CBL); (2) minutes of the CBLs
adoption and ratification; (3) minutes of the organizational meetings; (4) names and
addresses of the union officers; (5) list of union members; (6) list of rank-and-file
employees in the company; (7) certification of non-existence of a collective
bargaining agreement (CBA) in the company; (8) resolution of affiliation with
WASTO, a labor federation; (9) WASTOs resolution of acceptance; (10) Charter
Certificate; and (11) Verification under oath.

The BLR thereafter issued the union a Certification of Creation of Local Chapter
(equivalent to the certificate of registration of an independent union), pursuant to
Department Order No. (D.O.) 40-03.[4]

On October 1, 2003, the petitioner Electromat Manufacturing and Recording

Corporation (company) filed a petition for cancellation of the unions registration
certificate, for the unions failure to comply with Article 234 of the Labor Code. It
argued that D.O. 40-03 is an unconstitutional diminution of the Labor Codes union
registration requirements under Article 234.

On November 27, 2003, Acting Director Ciriaco A. Lagunzad of the Department of

Labor and Employment (DOLE)-National Capital Region dismissed the petition.[5]

In the appeal by the company, BLR Director Hans Leo J. Cacdac affirmed the
dismissal.[6] The company thereafter sought relief from the CA through a petition
for certiorari, contending that the BLR committed grave abuse of discretion in
affirming the unions registration despite its non-compliance with the requirements
for registration under Article 234 of the Labor Code. It assailed the validity of D.O.
40-03 which amended the rules of Book V (Labor Relations) of the Labor Code. It
posited that the BLR should have strictly adhered to the union registration
requirements under the Labor Code, instead of relying on D.O. 40-03 which it
considered as an invalid amendment of the law since it reduced the requirements
under Article 234 of the Labor Code. It maintained that the BLR should not have
granted the unions registration through the issuance of a Certification of Creation of
Local Chapter since the union submitted only the Charter Certificate issued to it by
WASTO.

The CA Decision
In its decision rendered on February 3, 2006,[7] the CA Tenth Division dismissed the
petition and affirmed the assailed BLR ruling. It brushed aside the companys
objection to D.O. 40-03, and its submission that D.O. 40-03 removed the safety
measures against the commission of fraud in the registration of unions. It noted that
there are sufficient safeguards found in other provisions of the Labor Code to prevent
the same.[8] In any event, it pointed out that D.O. 40-03 was issued by the DOLE
pursuant to its rule-making power under the law.[9]

The company moved for reconsideration, arguing that the unions registration
certificate was invalid as there was no showing that WASTO, the labor federation to
which the union is affiliated, had at least ten (10) locals or chapters as required by
D.O. 40-03. The CA denied the motion,[10] holding that no such requirement is found
under the rules. Hence, the present petition.

The Case for the Petitioner

The company seeks a reversal of the CA rulings, through its submissions (the
petition[11] and the memorandum[12]), on the ground that the CA seriously erred and
gravely abused its discretion in affirming the registration of the union in accordance
with D.O. 40-03. Specifically, it assails as unconstitutional Section 2(E), Rule III of
D.O. 40-03 which provides:

The report of creation of a chartered local shall be accompanied by

a charter certificate issued by the federation or national union indicating
the creation or establishment of the chartered local.

The company points out that D.O. 40-03 delisted some of the requirements under
Article 234 of the Labor Code for the registration of a local chapter. Article 234
states:

ART. 234. Requirements of Registration.[13] Any applicant labor

organization, association or group of unions or workers shall acquire legal
personality and shall be entitled to the rights and privileges granted by law
to legitimate labor organizations upon issuance of the certificate of
registration based on the following requirements:
(a) Fifty pesos (P50.00) registration fee;
 (b) The names of its officers, their addresses, the principal
address of the labor organization, the minutes of the
organizational meetings and the list of the workers who
participated in such meetings;
(c) The names of all its members comprising at least twenty
percent (20%) of all the employees in the bargaining unit
where it seeks to operate;
(d) If the applicant union has been in existence for one or
more years, copies of its annual financial reports; and
(e) Four (4) copies of the constitution and by-laws of the
applicant union, minutes of its adoption or ratification,
and the list of the members who participated in it.

The company contends that the enumeration of the requirements for union
registration under the law is exclusive and should not be diminished, and that the
same requirements should apply to all labor unions whether they be independent
labor organizations, federations or local chapters. It adds that in making a different
rule for local chapters, D.O. 40-03 expanded or amended Article 234 of the Labor
Code, resulting in an invalid exercise by the DOLE of its delegated rule-making
power. It thus posits that the unions certificate of registration which was issued in
violation of the letters of Article 234 of the Labor Code[14] is void and of no effect,
and that the CA committed grave abuse of discretion when it affirmed the unions
existence.

The Case for the Union

In a Resolution dated January 16, 2008,[15] the Court directed union board member
Alex Espejo, in lieu of union President Roberto Beltran whose present address could
not be verified, to furnish the Court a copy of the union comment/opposition to the
companys motion for reconsideration dated February 22, 2006 in CA G.R. SP No.
83847, which the union adopted as its comment on the present petition.[16]

Through this comment/opposition,[17] the union submits that the company

failed to show that the CA committed reversible error in upholding the registration
certificate issued to it by the BLR. Citing Castillo v. National Labor Relations
Commission,[18] it stressed that the issuance of the certificate by the DOLE agencies
was supported by substantial evidence, which should be entitled to great respect and
even finality.

The Courts Ruling

We resolve the core issue of whether D.O. 40-03 is a valid exercise of the
rule-making power of the DOLE.

We rule in the affirmative. Earlier in Progressive Development Corporation

v. Secretary, Department of Labor and Employment,[19] the Court encountered a
similar question on the validity of the old Section 3, Rule II, Book V of the Rules
Implementing the Labor Code[20] which stated:

Union affiliation; direct membership with a national union. - The

affiliate of a labor federation or national union may be a local or chapter
thereof or an independently registered union.

a) The labor federation or national union concerned shall issue a

charter certificate indicating the creation or establishment of a
local or chapter, copy of which shall be submitted to the Bureau
of Labor Relations within thirty (30) days from issuance of such
charter certificate.

xxxx

e) The local or chapter of a labor federation or national union shall

have and maintain a constitution and by-laws, set of officers and
books of accounts. For reporting purposes, the procedure
governing the reporting of independently registered unions,
federations or national unions shall be observed.

Interpreting these provisions of the old rules, the Court said that by force of
law,[21] the local or chapter of a labor federation or national union becomes a
legitimate labor organization upon compliance with Section 3, Rule II, Book V of
the Rules Implementing the Labor Code, the only requirement being the submission
of the charter certificate to the BLR. Further, the Court noted that Section 3 omitted
several requirements which are otherwise required for union registration, as follows:

1) The requirement that the application for registration must be

signed by at least 20% of the employees in the appropriate
bargaining unit;

2) The submission of officers addresses, principal address of the

labor organization, the minutes of organization meetings and the
list of the workers who participated in such meetings;

3) The submission of the minutes of the adoption or ratification of

the constitution and by-laws and the list of the members who
participated in it.[22]

Notwithstanding these omissions, the Court upheld the governments

implementing policy expressed in the old rules when it declared in Progressive
Development

Undoubtedly, the intent of the law in imposing lesser requirements in the

case of a branch or local of a registered federation or national union is to
encourage the affiliation of a local union with a federation or national
union in order to increase the local unions bargaining powers respecting
terms and conditions of labor.[23]

It was this same Section 3 of the old rules that D.O. 40-03 fine-tuned when the DOLE
amended the rules on Book V of the Labor Code, thereby modifying the
governments implementing policy on the registration of locals or chapters of labor
federations or national unions. The company now assails this particular amendment
as an invalid exercise of the DOLEs rule-making power.

We disagree. As in the case of D.O. 9 (which introduced the above-cited Section 3

of the old rules) in Progressive Development, D.O. 40-03 represents an expression
of the governments implementing policy on trade unionism. It builds upon the old
rules by further simplifying the requirements for the establishment of locals or
chapters. As in D.O. 9, we see nothing contrary to the law or the Constitution in the
adoption by the Secretary of Labor and Employment of D.O. 40-03 as this
department order is consistent with the intent of the government to encourage the
affiliation of a local union with a federation or national union to enhance the locals
bargaining power. If changes were made at all, these were those made to recognize
the distinctions made in the law itself between federations and their local chapters,
and independent unions; local chapters seemingly have lesser requirements because
they and their members are deemed to be direct members of the federation to which
they are affiliated, which federations are the ones subject to the strict registration
requirements of the law.

In any case, the local union in the present case has more than satisfied the
requirements the petitioner complains about; specifically, the union has submitted:
(1) copies of the ratified CBL; (2) the minutes of the CBLs adoption and ratification;
(3) the minutes of the organizational meetings; (4) the names and addresses of the
union officers; (5) the list of union members; (6) the list of rank-and-file employees
in the company; (7) a certification of non-existence of a CBA in the company; (8)
the resolution of affiliation with WASTO and the latters acceptance; and (9) their
Charter Certificate. These submissions were properly verified as required by the
rules. In sum, the petitioner has no factual basis for questioning the unions
registration, as even the requirements for registration as an independent local have
been substantially complied with.
We, thus, find no compelling justification to nullify D.O. 40-03. Significantly,
the Court declared in another case:[24]

Pagpalain cannot also allege that Department Order No. 9 is violative of

public policy. x x x [T]he sole function of our courts is to apply or interpret
the laws. It does not formulate public policy, which is the province of the
legislative and executive branches of government. It cannot, thus, be said
that the principles laid down by the Court in Progressive and Protection
Technology constitute public policy on the matter. They do, however,
constitute the Courts interpretation of public policy, as formulated by the
executive department through its promulgation of rules implementing the
Labor Code. However, this public policy has itself been changed by the
executive department, through the amendments introduced in Book V of
the Omnibus Rules by Department Order No. 9. It is not for us to question
this change in policy, it being a well-established principle beyond question
 that it is not within the province of the courts to pass judgments upon the
policy of legislative or executive action.

This statement is as true then as it is now.

In light of the foregoing, we find no merit in the appeal.

WHEREFORE, premises considered, we DENY the petition for lack of merit. The
assailed decision and resolution of the Court of Appeals are AFFIRMED. Costs
against the petitioner Electromat Manufacturing and Recording Corporation.

SO ORDERED.